For many companies, the challenge of 2009 was one of simple survival. Lunada Bay was one of the exceptions, actually managing to grow by a few percent. But even more important was the wisdom CEO Susan Crank gained. "The rules have changed over the past year, that's for sure," she says.
Crank brought a conservative game plan to her business, whose specialty is swimwear separates. Retailers expect Lunada Bay to be able to restock any item in any size and color, but Crank scaled back production, resulting in fewer late-in-the-season closeouts. "We could've done more business, but we really maximized the business that we did," Crank says. "This year taught us that there's a better way to do business. We didn't have as much to close out at the end of the season. It was a good thing to say, "Sorry, we're sold out."
Even after 23 years at the helm, Crank is still eager to learn how to run the business better, preferring to be "a good small-to-medium sized one than a mediocre large one." Headquartered in Anaheim, CA, The Lunada Bay Corporation began in 1980 as a licensee for OP Beachwear women's swim division, and has grown into a multifaceted swimwear company, a true hybrid in the apparel industry, Crank says, that designs, merchandises, sells and distributes.
Lunada Bay currently holds the licenses for Betsey Johnson, Lucky Brand and Mossimo Swim; it is the design house for Bisou Bisou for JC Penney and Catalina for Walmart; does design projects for OP for Wal-Mart; and finally, owns its own brand Becca.
For now, maintaining a conservative strategy
With a narrow focus on swimwear, growth comes primarily through new licenses, but Crank says she's not currently planning any new ones, preferring to see how the market shapes up, particularly with retail consolidation. "Over the past year the consumer has not pulled back from our swimwear," she says. "We were very happy to see that and we want to make sure that continues before we take anything else on. We love what we've got going on right now."
Though Lunada Bay is overall run like a single company when it comes to things such as accounting, distribution and customer service, each design team has its own separate identity, largely forged by its close working relationships with the licensees. Betsey Johnson - whose swimsuits can retail for up to $250 - has a very specific look, and does final approval on all designs herself. "When she chose us," says Crank, "it was because we proved that we could jump into her mind and present things that are a blend of our expertise in swimwear along with her aesthetic in color, print and silhouette."
The challenge with Mossimo is no different, says Crank, as "expectations at Target are high," both on the store's and customers' behalf. "We're always challenged to make sure we're addressing trends with great fabrics, colors and trim, and it's right there from a fashion standpoint with all the rest of the market. It's just as fast-paced," she says.
A well-trained workforce
Of Lunada Bay's 80 employees, most of the designers went to Otis College of Art and Design. "I truly believe that school really prepares designers to have a good balance of fashion and business," says Crank, who is on the school's board of trustees.
Lunada Bay subscribes to a trend forecasting service, but estimates that 70 percent of a season's collection comes from designers' own innovation and creativity. It's a process that Crank - who says she likes to oversee all of Lunada Bay's multifaceted operations without micromanaging - tries to stay out of.
"When it comes to creativity, which is what this company is well known for," she says, "you've got to let those who create do their jobs. So I stay far away from the inception process, because designers and merchandisers need to have leeway for experimentation."
Besides, Crank has a much bigger task: running a seasonal company that must endure months without income. "On an annual basis, you have to use your income wisely. And because there are months when you have no presence on the store floor, you have no momentum from a flow of merchandise. You're starting over every year from zero."
Ironically, the summer, when swimwear is most worn, is the slowest time for the company. It's also the time of high development costs as the cruise season prepares to start shipping in October. "During this time," says Crank, "we spend a lot of money. Development is a very long process for swimwear, because the fabrics are very expensive and very unique, with the high content of Lycra. So we're doing development, and development is always very expensive."
Another part of the cost comes from using fit models, which are critical for swimwear. "Every fabrication has different stretch propensities and has to be fit separately. The way a fabric feels on the skin is as important as it looks, and only a model can talk about how the fabric feels. There's nothing like a pro fit model."
From an eco-friendly standpoint, while Lunada Bay is experimenting with sustainable fabric innovations such as bamboo and soy, recycled polyester has been less successful because of the feel of the fabric on the skin.
Lunada Bay is also equally concerned about how things feel on the inside. Crank calls philanthropy "so important and critical," and the company is involved with both environmental and children's initiatives.
Christian Chensvold is an Apparel contributing writer based in the San Francisco Bay area.
Lunada Bay will celebrate its 30th anniversary in 2010.
Workforce is 77 percent female, 23 percent male, and average employee longevity at the company is 10 years.
Favorite Business Book
Susan Crank's favorite business book is Spencer Johnson's "Who Moved My Cheese?"